Online advertising spend 'surpasses TV'

Online advertising expenditure has grown significantly over this year to surpass TV for the first time ever, new research has revealed.

According to a report by the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC), spending on internet-based advertising increased by 4.6% during the first half of 2009 to reach £1.752bn.

In comparison, expenditure on TV advertising stood at £1.6bn, down from £1.9bn year-on-year. The growth in online advertising also occurred despite the entire advertising sector declining by 16.6% during the first half of this year.

Technology companies invested the most in online ads, constituting 19% of the overall market, followed by telecoms, finance and then entertainment and media.

IAB and PwC also noted that the proliferation of online video has helped the internet grow its advertising revenues. Along with the "tried and tested" method of rich media, pre and post roll adverts - in which promotions run before and after video streams - have grown by 195% year-on-year, indicating advertiser willingness to engage with multimedia content.

"Internet advertising has beaten all expectations to achieve growth in the most challenging market conditions," said IAB chief executive Guy Phillipson.

"Online display has performed notably well against its peers in TV, print and radio despite more than £1.5 billion being wiped off the advertising industry. We have a rollercoaster of a year ahead but even in tough economic conditions marketers still recognise the value, accountability and measurability of online advertising."

PwC online advertising expert Eva Berg-Winters added: "Perhaps surprisingly, a slowing economy has accelerated the migration to digital technology and hence the continuing shift from more traditional forms of advertising to online, which promises return on investment and measurability in a period of instability. The only certainty is that this transgression demands fundamental structural change of business models across all industries."

However, UK commercial TV marketing body Thinkbox urged caution when considering the figures due to the wide variety of advertising methods available online.

Speaking to BBC News, the organisation's marketing director Lindsey Clay explained: "Online marketing spend is made up of many things, including e-mail, classified ads, display ads and, overwhelmingly, search marketing. They should be judged individually.

"The internet is a fantastic technology and home to many different marketing activities that do different things. As such, it is interesting but meaningless to sweep all the money spent on every aspect of online marketing into one big figure and celebrate it."

Clay added that "pound for pound" TV advertising remains the most effective medium, but it can be even more competitive when used in tandem with online ads in a "complementary relationship".